Casinos cite expansion economics

An expansion of gambling in Illinois would inject $2.2 billion into the state economy, create 26,000 jobs and add $364.6 million in tax revenues, according to a University of Illinois study released Wednesday.

"Casinos are hampered from reaching their full economic potential," says Todd Maisch, vice-president of government affairs for the Illinois State Chamber of Commerce, which helped fund the study. "Given the pending state budget crises, this plan would give Illinois the chance to create a more powerful engine for economic growth."

Activating the state's still-unused 10th casino license would add 14,000 more jobs, improving the economy further, according to the study by University of Illinois' Regional Economic Applications Laboratory (REAL).

But skeptics remain unconvinced, claiming the study is flawed because it doesn't factor in the costs associated with gambling addictions that could result from expansion.

And even though Gov. Rod Blagojevich and other politicians might welcome a way to add sorely needed funds to state coffers, any large-scale expansion of gambling remains uncertain and is likely to face stiff opposition.

The riverboat casinos' plan calls for removing limits on the number of slot machines they can operate and asks the state to roll back gaming taxes to pre-2002 levels so they are comparable with tax rates in neighboring states like Indiana and Missouri.

Illinois' tax rate, approved by the legislature last summer, increased gaming taxes to 50% from 35% of gross revenues for the state's most lucrative casinos. By comparison, Indiana's tax rate is 35% and Missouri's is 20%.

High taxes and restrictions on slot machines are causing Illinois casinos to lose market share in the region, says Tom Swoik, executive director of the Illinois Casino Gaming Assn. Casino operators, most of which are publicly traded and beholden to shareholders, have no incentive to invest in their Illinois properties when they can earn greater returns elsewhere, he says.

Based on the study's findings, Mr. Swoik says, the benefits of more slots and lower taxes "will ripple throughout the state." Other industries will profit as casinos spend more on local goods and services, and as employees spend their paychecks in their communities, he says.

Mr. Swoik said the study did not take into account the social costs associated with gambling.

"That ought to sound real alarm bells off," says Rev. Tom Grey, executive director of the Chicago-based National Coalition Against Gambling Expansion. "The more available and accessible you make gambling, the more the addiction rate grows." That means added costs for treatment and law enforcement initiatives.

In response to a question during a press briefing Wednesday, Mr. Swoik said gambling addiction is "a whole other area that needs to be delved into." The costs--if any--won't be substantial, he says.